The Hour Glass Case Study
1. Based on the case study above, attempt the following questions : a. Identify and justify three strategies that have been implemented in the organization. From the case study given, The Hour Glass has been facing lots of tough time while they trying to be everlasting in the business world. In making the base of the company will going lasting, this company has been taking lots of the strategy in avoiding their business find the way to be doom in the upcoming years. So, there have three strategies that has been use the by the company in facing the problems.
This strategy has been structured in decide, in making the impact of the company will be going advantages to the company soon. The first strategy that has been found in the case study, which is, The Hour Glass has been decide taking this decision as their strategy. Their first strategy is related diversification. The related diversification can be understand as the company has been adding the new diversification in their company and the diversification will be related with their products or services before.
The implication by using this strategy in maintaining the company flows, which are, this strategy can make the company will be more understand the business really well. Other than that, the company will know the opportunities and threats that will the company facing in using this strategy. So, from that, the company also can predict the problems that will come in future by preparing to face it. This will puts the company in the save the condition, and on same time, the company is on trying to make the business runs smoothly.
The proof has been seen that THG has been deciding to take this decision as their strategy in their business, that is, THG company has been started the business by retailing the watches. So, they structured the initiatives while facing the problem by incorporation with watch making business. This is Swiss, the luxury watches. This business has been changed THG from the retailer to the manufacturer. The related diversification can be seen when the company has been started the business as the retailing of watches and after that, they becoming the manufacturer for the luxury watches, which is, Swiss.
The second strategy is unrelated diversification. Unrelated diversification can be understood as the company has been adding the new diversification in their products and services, but they adding the different diversification to their business. The implication for the company in using this strategy in their business is, risk spreading. In entering the new products into the new markets, this strategy will offers the protection in against the failure the current products and markets. Other than that is, the company will potentially will have the high profit opportunities.
This can be explain, the company will have the ability to move into the high growth profitable. So, this will help the company in improving the company profits. In proofing THG using this decision for their strategy, THG whose core in the watches business before than they change the way of the business in the food industries, which is Milano’s pizza. This can be seen the different between before and past product that has been THG chosen for the next improving for the company. The third strategy is divestiture. Divestiture can be understood as the removal of assets from the company books.
The businesses divest by the selling of ownership stakes, the closure of subsidiaries, and the bankruptcy of division and so on. In understand simpler, this divestiture is about selling a division or part of an organization. The implication to the company in using this strategy is, this strategy will be improving the company operating. Most of the company will use this strategy when they have any problems. So, in making the company still tough harsh in the business world, the company will take this strategy as the other steps in make the business will be stronger.
The company will be start to the divestiture to the other company or public that will help them in the finance prospects. So, this will make the company will be still stand up high even they have the problem in their company, which is most of it, will be problem in finance prospects. The proof can be known that “In 1999, THG sold its two watch making subsidiaries to Bulgari, the owner of the luxury brands, at a price just below the assets employed by the two watch making subsidiaries. The other understands is will help the company increase the shareholder values.
All this strategy has been using in the THG Company since the company facing lots of the problems that need to be solve. So, from these strategies the company has been found the steps in making the company will still standing in their own way, by taking these strategies and applies it in the company. b. Suggest a possible alternative strategy to overcome the crisis in THG organization and give reason for your suggestion. From the case study, THG has been taking a long time in settling their problem that face to the company.
Other than three strategies, the company can use other strategies that suitable with the company condition, which is will help the company in solving the company problems. The first suggestion strategies that the company can use in solving the company problems are retrenchment. Retrenchment can be understood as the regrouping through cost and asset reduction to reverse declining sales and profits. Retrenchment can be simpler understand as the company will fired the workers under the reason not enough profits to pay the salary.
When this situation happens, the company need to think more about the company than the workers. This is because, when the company problems have related with the finance prospects, more specific, the profits. The company need to think how to save the profits and fired the workers will be the suitable way to solving this problems, step by step. Which mean here, when the company know how the condition of the company, they need to decide a decision that will help the company to reduce the problems and burden in paying the workers.
So, taking a decision to fire the workers is a way to make the company will reduce the burden the company needs to hold. This will make the company will more focus on more important thing, like how to save the company from doom and so on. This can be seen the condition of the THG, which is desperately in burden to take care of the many things. THG have problem in their business, they start with watches industry, but trying with food industries also, then they trying to be manufacturers of watches.
But they have losses in both industries, which is THG incurred several years of losses on its restaurant business. THG also experienced similar frustration in the watch making business. THG losses incurred by the business peaked in 1998-1999 when they were just under $12 million. So, this give the example to the company, when the company don’t have any profits for the workers, the company need and must to fired the workers to less the burden of the company that has been hold before.
The retrenchment benefits will be given by the employers to the workers by giving the last payment for the loss of employment. This benefit will cover up the workers by having any trouble after them loss their jobs. The second suggestion for the strategy is liquidation. Liquidation can be understand as the selling all the company’s assets, in parts, for their tangible worth. Most of the liquidation will happen to the company; there no possibility liquidation will happen to the individual.
The implication in using this strategy is if the company on using liquidation, the creditors can not take any further action against to the company. The fact that the liquidator deals directly with creditors, which can help the company directors to avoid any problems. It can also be a quick way of bringing an end to the company. For the companies that are in a position to undertake a Member Voluntary Liquidation and pay off their debts within twelve months. This give benefits to the Directors and other preparing to make the payment of the debts.
In using this strategy, there have less negative implication to the company. But still have negative implication which is, if the trouble or the company problem can’t be solve, the company will have the bad situation in this strategy. The creditor also can make an effort to stop the company to start the operating again. There always have the potentials, liquidators will make the investigation to the company and discovers any criminal offences or that the company has not been operating correctly. This could result in legal action, which will further damage the reputation of the company.
Based on the case study, the THG restaurant business has been big losses. So, from this condition, THG can sold the part by part of their restaurant to make their debts can be pay by using that money and will release few burden that the company has been hold before. The selling part by part of the restaurant has been decide to make the company will arrange the part by part of their company be more structured. Which mean here, the company will arrange or selling part by part of their restaurant in taking the steps to well-organized the decision in way to structured their in and out of their property.
In the same time, they know how much the debts need to pay by doing structured like that. The third and last suggestion for another strategy is market development. Market development can be defined as the introducing present products or services into new geographic. The implication in use the market development is the product or services can achieve the customers more easily. This will change the company profits and helps the company to recover back. Like THG, has being the manufacturer for the Swiss watches. This product has been reach to the Asia and nearer the Switzerland area.
So, THG need to do the market development to their product in making their product can achieve the customers. So, with this effort, will make the customers can achieve the products and will helps the company to have more profits. The most suitable market development for the Swiss watches is Dubai. Since Dubai is the richest in technology, development and more thing, Swiss watches will suitable for the Dubai people. Since Dubai is the place for the tourist, businessman and more. The chance of Swiss watches will be reach the customers will be positive potential.